BP Opposes Extending Spill Accord to Moratorium Losses

Sept. 10 (Bloomberg) -- BP Plc’s oil-spill claims
administrator shouldn’t be allowed to extend a settlement to
cover the claims of losses caused by the Obama administration’s
deep-water drilling ban, the company told a court.

Lawyers for businesses claiming harm from the 2010 spill
made a proposal last month to use damage formulas set out in
BP’s settlement of economic-loss claims to compensate additional
enterprises for losses stemming from the government’s post-spill
suspension of deep-water drilling in the Gulf of Mexico.

The company opposed the idea in court papers filed today in
U.S. District Court in New Orleans.

“Principles of substantive contract law preclude the
claims administrator or the court from contradicting or re-writing the settlement, which requires the parties’ concurrence
on how to handle these moratoria-related issues,” BP said. Such
losses “were expressly excluded from the settlement.”

BP has consistently denied having any liability for
billions of dollars in losses the Gulf Coast economy suffered
from the drilling ban, even as the company accepted
responsibility for losses caused directly by the spill.

“BP and the plaintiffs’ steering committee (PSC)
explicitly agreed to exclude moratoria losses from the
settlement agreement and to jointly develop guidance governing
how to differentiate between covered losses and such excluded
moratoria losses,” Geoff Morrell, a spokesman for the London-based company, said in an e-mailed statement.

‘Better Deal’

“The PSC now seems to think it can bypass the agreement
and get a better deal by appealing directly to the claims
administrator to implement a policy on moratoria losses,”
Morrell said.

The lead attorneys for the PSC said the plaintiffs weren’t
seeking to push BP to pay claims it hadn’t agreed to settle.

“We were simply asking the Claims Administrator if he
could come up with a proposal for how to decipher what portion
of a given claimant’s loss was moratorium related, and how much
was not,” James Roy and Steve Herman said today in an e-mailed
statement. The company’s filing “is just another effort by BP
to delay the payment of compensation to deserving victims,”
they said.

The oil company said in today’s court filing that the
proposed compensation formulas for losses caused by the
moratorium were created by individuals singled out in a recent
ethics probe as having engaged in improper conduct.

Preliminary Investigation

Former Federal Bureau of Investigation director Louis Freeh
completed a preliminary investigation into allegations of fraud
and misconduct at the court-supervised claims settlement program
last week. He cleared Patrick Juneau, the claims administrator,
of wrongdoing while detailing ethical violations and potentially
criminal conduct by several senior lawyers in the program.

U.S. District Judge Carl Barbier, who is overseeing
thousands of spill-damages suits, asked BP to respond to the
proposal to extend its settlement to moratorium claims. The
extension was jointly proposed by lawyers leading the spill
litigation and BP’s claims administrator after negotiations
between BP and the lawyers broke down in mid-August, according
to the filing.

BP has fought the claims administrator for months, saying
Juneau’s misinterpretation of settlement terms is costing it
billions of dollars in payments to businesses that weren’t
directly harmed by the spill.

Costs Soar

As a result, the estimated cost of the spill-claims accord
has swollen to at least $9.6 billion from $7.8 billion in mid-2012, BP said in recent regulatory filings. The offshore oil
spill was the worst in U.S. history.

Barbier has repeatedly refused to suspend claims payments
while BP appeals Juneau’s interpretation and Freeh continues to
investigate the program.

An appeals court in New Orleans heard arguments in the
Juneau dispute in July. It hasn’t ruled.

The case is In Re Oil Spill by the Oil Rig Deepwater
Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S.
District Court, Eastern District of Louisiana (New Orleans).